“It’s a great move for everyone connected with the business” explained Andy. “It will allow me to focus more on strategy and business development whilst still looking after my small portfolio of clients, reassured the day to day operations of the business are in safe hands with someone who knows the organisation, clients and team inside out. Sophie is not only an expert accountant but is also very organised and great with technology so I’m confident the business will continue to grow and flourish under her tutelage.”

Sophie qualified as a Chartered Accountant in 2017, joined the Board of Directors in 2021 after a string of promotions and became a shareholder in 2023. She is also Chair of the Humber Network Board of the Institute of Chartered Accountants in England and Wales (ICAEW).

“We’re constantly trying to future proof and de-risk our business and me stepping away from the tactical side of operations takes us a step closer to this goal” continued Andy.

Sophie Holmes said “I am truly honoured that the Board has placed their trust in me, and I am grateful for the confidence they have shown in my ability to step into this role. As Managing Director, I look forward to acting as a strong conduit between the Board and the Senior Leadership Team, ensuring clear alignment as we move forward. I am excited to mentor our talented team and to play a key role in delivering on our future goals and ambitions.”

The post New Managing Director Appointed at 360 Chartered Accountants appeared first on 360 Chartered Accountants.

Registering Benefits for Payrolling

To payroll benefits, you must register them with HMRC before the start of the tax year.

For the 2026 tax year, only benefits registered before 6 April 2026 can be payrolled. Missing this deadline means those benefits must be reported using traditional methods instead.

How Payrolling Operates

Once a benefit is registered for payrolling, you’ll need to:

• Calculate the cash equivalent of each employee’s benefit
• Add this value to the employee’s regular pay
• Deduct tax through the payroll as part of their normal pay cycle

HMRC will automatically adjust employees’ tax codes to ensure the benefit is not taxed twice.

Reporting Requirements

If you payroll a benefit:

• You do not need to submit a P11D form for that benefit
• You must still calculate and report Class 1A National Insurance contributions using form P11D(b)

This ensures that employer National Insurance obligations are still being properly accounted for while income tax is handled in real time.

Excluding Employees

It’s possible to exclude certain employees from a payrolled benefit. However, there are important rules to keep in mind:

• You’ll need to report their benefits using a P11D form instead
• Once an employee is excluded, they cannot be readded to that benefit within the same scheme

Benefits That Cannot be Payrolled

Not all benefits are eligible for payrolling. You cannot payroll:

• Employer-provided living accommodation
• Interest-free or low-interest (beneficial) loans

These must always be reported using traditional methods.

Submitting Your Returns

Employers must submit their P11D and P11D(b) forms using one of the following:

• PAYE Online for employers
• Commercial payroll software

If all benefits for an employee are payrolled, you do not need to submit a P11D for them. However, you must submit a P11D(b) to declare and pay any Class 1A National Insurance owed.

Key Deadlines

For the 2025 to 2026 tax year, the deadline to submit both P11D and P11D(b) forms is 6 July 2026.

Missing this deadline can result in penalties, so it’s important to plan ahead and ensure all reporting is completed on time.

The post How Payrolling Benefits Works appeared first on 360 Chartered Accountants.

Why Does HMRC Require Record Keeping?

HMRC requires businesses to maintain records so they can verify that the correct amount of tax is being reported and paid, and that you are paying your staff the National Minimum Wage. Keeping tax records also helps you:

• Track income and expenses accurately
• Prepare tax returns efficiently
• Provide evidence if HMRC opens an enquiry
• Make better financial decisions
• With credit control

If your records are incomplete or missing, it can lead to penalties, estimated tax bills, and unnecessary complications.

General HMRC Record-Keeping Rules

The exact time frame depends on your business type, but there are some general rules that apply across the board.

Most businesses must keep financial records such as invoices, receipts, bank statements, payroll records, and tax returns for between 3 and 6 years. These records must be accurate, complete, and accessible if HMRC requests them.

If your return is filed late, or HMRC opens an investigation, you may need to keep records for longer. This is why strong HMRC record keeping processes are so important.

VAT registered businesses must typically keep records for at least 6 years, while employer payroll records usually need to be kept for 3 years from the end of the relevant tax year.

Alongside tax requirements, businesses must also consider data protection laws. Certain HR records, such as job applications or disciplinary notes, should not be kept longer than necessary and may need to be deleted earlier in line with GDPR.

How Long Sole Traders Must Keep Records

If you are self-employed, you must keep your records for at least 5 years after the 31st January deadline for submitting your tax return.

For example, for the 2024 to 2025 tax year, the submission deadline is the 31st January 2026. This means you must keep your records until at least January 3031.

These records include income, expenses, bank statements, and any supporting documentation. Proper record keeping ensures you can confidently complete your Self Assessment and respond to any HMRC queries.

How Long Limited Companies Must Keep Records

Limited companies are required to keep records for 6 years from the end of the financial year they relate to.

This includes:

• Company accounts
• Corporation Tax records
• PAYE and payroll information
• VAT records if registered

Limited companies must also comply with Companies House requirements, meaning their HMRC record keeping obligations are typically more detailed than those of sole traders.

Which Records Should Be Destroyed?

While many records should be retained, it’s equally important to know when records should be securely destroyed.

Under GDPR, personal data must not be kept longer than necessary. This means some records should be deleted or destroyed sooner than tax-related documents, particularly those involving employee or applicant information.

Examples include:

• Job applicant records, typically kept for 6 to 12 months
• Interview notes and recruitment assessments
• Disciplinary and grievance records, depending on company policy
• Right to work documentation, usually kept for 2 years after employment ends

When destroying records, ensure they are disposed of securely, especially if they contain sensitive or personal data. Digital files should be permanently deleted, and paper documents should be shredded.

Digital Vs Paper Records

HMRC accepts both digital and paper records, but digital record keeping is becoming the preferred approach.

Digital systems, including cloud accounting software, allow you to store records securely and access them easily when needed. This is particularly important as Making Tax Digital continues to expand.

Benefits of digital record keeping include improved organisation, reduced risk of loss, and real-time financial visibility. Cloud-based systems also offer automatic backups and secure access from anywhere.

Before ending any subscriptions to cloud accounting software, make sure access can be reactivated if necessary.

Paper records are still acceptable, but they can be harder to manage and more vulnerable to damage or loss. If you use paper, consider scanning and storing copies digitally for added security.

What Happens if Records Are Missing?

If you fail to keep proper records, HMRC can take action.

Missing records may result in HMRC estimating your tax bill, which is often higher than expected. You could also face penalties, especially if poor record keeping is seen as careless or deliberate.

If records are lost due to events outside your control, such as a fire, theft, or technical failure, you should try to reconstruct them using alternative evidence like bank statements or supplier invoices. It is also important to inform HMRC where appropriate.

Strong tax record keeping practices, especially using digital or cloud systems, can significantly reduce the risk of this happening.

How an Accountant Helps With Record Keeping

Managing business records can be time-consuming, particularly as your business grows. An accountant can help ensure your record keeping is accurate, compliant, and efficient.

At 360, Chartered Accountants, we support businesses with everything from setting up cloud accounting software to maintaining organised, compliant financial records. We help you understand how long to keep tax records, ensure nothing is missed, and give you confidence that your business is meeting HMRC requirements.

If you are unsure whether your current record keeping meets the rules, our team is here to help you stay on track.

The post How Long Do You Need To Keep Business Records? appeared first on 360 Chartered Accountants.

Can I Legally Employ Family Members?

Yes, employing family members is legal in the UK. There are no specific laws preventing you from hiring relatives in your business.

However, the same employment and tax rules apply as they would for any other employee. That means family members must:

• Perform genuine work for the business
• Be paid a reasonable wage for the work they do (and at least the National Minimum Wage for their age)
• Be treated as real employees for tax and payroll purposes

If the role is legitimate and the pay reflects the work completed, family employment can be perfectly acceptable.

Problems usually arise when payments are made purely to reduce tax rather than for actual work.

Can I Pay My Spouse Through My Business?

Yes, many small businesses involve a spouse or partner. Paying your spouse through your business is allowed, provided they genuinely work for the company.

When employing a spouse, their salary should reflect the work they actually perform. For example, paying a spouse a large salary when they do very little work could raise questions from HMRC.

When done properly, employing family members such as a spouse can be tax efficient. A salary paid to them is usually treated as a business expense, which reduces your company’s taxable profit.

Can I Employ My Children?

Yes, family employment can include children, but there are important age restrictions and employment rules.

Children under 16 can work in some limited roles, but there are restrictions on hours and the type of work they can perform. For children over 16, employment rules become more straightforward. They can be employed in the same way as other workers and must be paid through payroll.

Common tasks children might carry out in a small business include:

• Filing and basic admin
• Packing orders
• Assisting with stock
• Helping with social media or digital tasks

As with any other employee, wages must be reasonable for the work performed.

Do I Need to Run PAYE?

In most cases, yes. If a family member earns above the relevant thresholds, you must operate HMRC payroll using PAYE, just as you would for any other employee.

This means:

• Registering as an employer
• Running payroll
• Deducting income tax and national insurance where required
• Reporting wages through real time information submissions
• Operating a Work Place Pension Scheme

Even if a family member earns below tax thresholds, you may still need to record their pay correctly through payroll.

Failing to run PAYE when required is one of the most common mistakes businesses make when employing family members.

What Triggers HMRC Issues?

Most businesses that follow the rules will have no problems with family employment. However, there are situations that can attract HMRC scrutiny.

Common red flags include:

• Paying a family member a salary for little or no work
• Paying wages that are far higher than the role justifies
• Making irregular payments without proper payroll records
• Claiming wages as an expense without evidence of work
• Failing to operate PAYE when required
• Not paying the National Minimum Wage

If HMRC reviews your accounts and believes payments were not for genuine work, they may disallow the expense. This means wages cannot be deducted from profits and additional tax may be owed.

Keeping proper records of the work carried out helps avoid these issues.

Is It Tax Efficient to Employ Family?

When structured correctly, employing family members can be tax efficient.

Because wages are normally treated as business expenses, they reduce the profit your business is taxed on. At the same time, family members may have unused personal tax allowances, meaning the income they receive could be taxed at a lower rate.

However, this only works if the arrangement reflects genuine employment. Artificial arrangements designed purely to reduce tax can cause problems with HMRC.

The goal should always be compliance first, with tax efficiency as a secondary benefit.

How to Do Family Employment Properly

The safest way to approach family employment is to treat relatives the same as any other employee.

This includes:

• Creating a clear job role
• Paying a reasonable market wage
• Keeping timesheets or records of work
• Running payroll correctly
• Maintaining proper employment records
• Issuing an Employment Contract

While employing family members is common in small businesses, the tax rules can sometimes be misunderstood. A poorly structured arrangement can lead to payroll mistakes or HMRC challenges.

As 360, Chartered Accountants, we help small businesses set up compliant payroll systems, structure family employment correctly and ensure wages are handled in a tax efficient way. Need some advice? Get in touch with 360 Accountants today.

The post Can You Employ Family Members in a Small Business? appeared first on 360 Chartered Accountants.

Whilst the deadline for filing your 25/26 Self Assessment tax return isn’t until 31 January 2027 (which seems like ages away), there are many benefits to filing it straight after 5 April.

Ten Reasons to File Your Tax Return in April (and not January)

1. If you are due a refund (either because your income has dropped or you are deducted too much tax at source) then you will receive this much sooner. File your return in April and the cash could be in your bank account in early June.

2. If your income has fallen then you will be able to reduce the 31 July 2026 payment on account to the correct, lower amount rather than paying too much and waiting for HMRC to refund you.

3. Filing it last minute is stressful.

4. If you (or your accountant) start preparing the return later in the year and there is missing information or an IT issue then you may miss the deadline and incur penalties and interest.

5. Knowing how much tax is due in January and July 2027 in April or May 2026 gives you time to plan for the payment / save up.

6. If you leave the return to January 2027 then some of the transactions you are recording will be nearly 2 years old. You’re less likely to remember or be able to find the details than if you do it when it’s fresh in the memory.

7. If you’re self employed and applying for a mortgage or funding then having up to date figures will speed up the application process.

8. If the return highlights a higher than expected tax liability and you are only a small way through the new tax year then you may be able to re-structure your affairs to reduce next year’s bill.

9. If you (or your accountant) needs to speak to HMRC then they are much less busy (and easier to get hold of) in April than January.

10. If you need to comply with Making Tax Digital for Income Tax Self Assessment (MTD ITSA) ie you had combined income from rent and self employment of over £50K in 24/25 then you will need to maintain MTD compliant accounting software from 6 April 2026 and make quarterly submissions to HMRC. The opening balances that need entering into the software will be easier to calculate if your 25/26 tax return has been completed and signed off.

360, Chartered Accountants is now accepting 2025/26 tax return clients.

For a free, no obligation initial meeting (either in person or online) please contact us on help@360accountants.co.uk or 01482 427360.

Alternatively, if you would like a copy of our free Personal Tax Planning brochure, please contact us on the above.

The post Ten Reasons to File Your Tax Return in April appeared first on 360 Chartered Accountants.

The good news is that with the right setup and support, hiring does not have to be stressful. At 360 Accountants, we help small businesses and sole traders take this step with confidence.

Before You Hire Your First Employee

Before your new employee starts, there are a few essentials to put in place. These ensure you stay compliant with the law and avoid nasty surprises later.

1. How Do I Register As An Employer?

You must register with HMRC as an employer before you pay anyone. This tells HMRC that you are going to run payroll and operate PAYE.

You can register online on the GOV.UK website. You will need details about your business, such as your business name, address and contact information. Once registered, HMRC will send you:

• An Employer PAYE Reference
• An Accounts Office Reference

You’ll use these every time you deal with HMRC about payroll.

We recommend registering at least two weeks before your first payday, as it can take time for HMRC to issue the details.

2. What is PAYE?

PAYE stands for Pay As You Earn. It’s the system HMRC uses to collect Income Tax and National Insurance from employees’ wages.

Instead of your employee paying tax directly, you deduct it from their pay each time you run payroll. You then send that money to HMRC on their behalf, along with any Employers’ National Insurance you may have to pay.

3. How Does PAYE Work?

Each time you pay your employee, you:

1. Calculate their gross pay
2. Deduct Income Tax and Employee’s National Insurance using their tax code
3. Deduct any other items such as student loan repayments or pension contributions
4. Pay the net amount to the employee
5. Report the details to HMRC through payroll software
6. Pay HMRC what you have deducted, usually monthly

This process has to be done accurately and on time. Late or incorrect submission can lead to penalties.

4. Set Up Payroll Software

You must use payroll software that is recognised by HMRC. This is how you calculate pay, deductions and submit information to HMRC in real time.

Many business owners start with basic software, but as things grow, it can become time consuming. This is where using an accountant to run payroll can save you time and reduce risk. Check out our payroll services.

5. Check Minimum Wage Rules

You must pay at least the National Minimum Wage or National Living Wage, depending on your employee’s age and status. Rates change regularly, so it is important to keep up to date.

Paying below the legal minimum wage can lead to fines and reputational damage. We always make sure our clients are paying the correct rates.

Ensure you take any unpaid overtime into account when checking your employee is being paid above the National Minimum Wage.

6. Prepare an Employment Contract

While this guide focuses on tax and payroll, you also need a written statement of employment particulars. This includes things like pay, hours, holiday and notice periods. This protects both you and your employee.

7. Other Responsibilities

You’ll need to have Employers’ Liability Insurance in place and comply with the various health and Safety in the Workplace regulations.

After You Hire Your First Employee

Once your employee is on board, your responsibilities do not stop. You’ll need to manage payroll properly each pay period and stay compliant with HMRC and pension rules.

1. Run Payroll Every Pay Period

Each time you pay your employee, you must:

• Calculate wages and deductions
• Submit a Full Payment Submission to HMRC on or before payday
• Keep accurate payroll records

This has to be done whether you pay weekly, fortnightly or monthly.

2. Pay HMRC

You will usually pay HMRC monthly for the tax and National Insurance you have deducted. The deadline is the 22nd of the following month if you pay electronically.

Missing deadlines can result in interest and penalties.

3. Provide Payslips

You must give your employee a payslip showing their gross pay, deductions and net pay. This can be digitally or on paper.

4. Keep Records

You need to keep payroll records for at least six years. This includes pay details, deductions and reports sent to HMRC.

Workplace Pensions

Do I Need a Workplace Pension?

In most cases, yes. If you employ staff in the UK, you must assess them for automatic enrolment into a workplace pension scheme.

If your employee:

• Is aged between 22 and State Pension age, or
• Earns above the earnings threshold

Then you must automatically enrol them into a pension scheme and make employer contributions. Even if they do not meet the criteria, you still have duties to provide information and offer a scheme in certain situations.

Pensions can be confusing, but you are not alone. At 360 Accountants, we help clients set up pension schemes and manage ongoing contributions as part of our payroll service.

Payroll

Are There Any Payroll Mistakes to Avoid?

Yes, and they are more common than you might think. Here are a few we see regularly:

• Registering late with HMRC and missing the first payroll submission
• Using the wrong tax code
• Paying staff without submitting reports to HMRC
• Missing pension duties
• Paying the wrong minimum wage
• Not keeping proper records

Each of these can lead to penalties, backdated payments or unhappy employees. Getting things right from day one saves time, money and stress later.

Can An Accountant Run Payroll For Me?

Absolutely! In fact, many small business owners choose to outsource payroll so they can focus on running and growing their business.

At 360 Accountants, we act as a payroll partner for our clients. That means:

• We set up your payroll correctly
• We calculate pay and deductions
• We submit reports to HMRC on your behalf
• We produce payslips for your employees
• We handle pension contributions
• We make sure everything is compliant

You still stay in control, but you don’t have to worry about the technical details or deadlines.

How 360 Accountants Can Help

We’re a Hull based firm supporting SMEs and sole traders across England and Wales with payroll, PAYE, pensions, bookkeeping and tax planning. When you hire your first employee, we guide you from HMRC registration right through to running payroll every pay period.

Our job is to make sure your systems work smoothly, your staff are paid properly, and your business stays compliant, so you can focus on growing with confidence. Get in touch with us today.

The post Hiring Your First Employee: Tax & Payroll Basics appeared first on 360 Chartered Accountants.

We’ve compiled a list of the most important takeaways from the 2025 Autumn Budget for businesses across the UK.

Will the minimum wage increase in 2026?

Yes, the National Minimum Wage will increase from 1st April 2026.

360 Accountant’s Andy Steele says:

Businesses should calculate the impact on wage costs as a matter of urgency and decide on a strategy to minimise impact on the bottom line.”

Will there be changes to ISAs in 2027?

In a bid to encourage more investment, the Chancellor has announced there will be new restrictions to the amount of money that can be saved tax-free in a cash ISA. The cash limit will be reduced from £20,000 to £12,000. The lost £8,000 will be available to be placed in investments.

This change doesn’t apply to any one over 65.

We recommend you speak to an independent financial adviser (IFA) before making any further contributions to ISAs.

New Funding for SMEs

SMEs across the country will be eligible for fully-funded training for all employees under 25.

360 Accountant’s Andy Steele says:

This appears to be a U-turn on changes to apprenticeship funding in a previous budget. If you are considering employing an apprentice or young person, you should research whether or not you will qualify and whether or not the courses are partly or fully funded.”

Higher Corporation Tax

Some Capital Allowances will be reduced from 18% to 14% from April 2026. This change could mean higher Corporation Tax bills for some companies.

360 Accountant’s Andy Steele says:

Businesses that are concerned about this change are encouraged to talk to their accountants about the timing of capital expenditure.”

Changes to Rental, Dividend & Savings Income

From April 2026, there will be a +2% increase on tax for any dividend income.

From April 2027, there will be a +2% increase on any savings or rental income.

360 Accountant’s Andy Steele says:

If you are a landlord and are concerned about how this will affect you, we recommend speaking to your accountant about structuring your affairs in the most tax efficient manner.”

Changes to Electric & Hybrid Vehicles

Driving an electric vehicle will become more expensive from April 2028. Electric vehicle (EV) drivers will be charged 3p per mile, and hybrid vehicles will be charged 1.5p per mile on top of Vehicle Excise Duty.

Council Tax Surcharge for Homes Worth More Than £2m

There will be a new ‘Annual Charge’ for anyone living in a home that’s worth more than £2m. This tax surcharge will come into effect from April 2028.

There will be four price bands for this surcharge. We know at the moment that if a property is worth £2m, the surcharge will be £2,500, and if a property is worth over £5m, the surcharge will be £7,500.

This change is being referred to as the ‘Mansion Tax’, but may also capture homes in expensive areas. It is estimated that this surcharge will be levied on around 100,000 properties, most of which are in the London and South East of England.

Other Autumn Budget 2025 Highlights

• Voluntary Class 2 National Insurance contributions will be removed from some people living abroad – please speak to your accountant if this applies to you.
• Changes to Salary Sacrifice from 2029 – if you use this, we encourage you to speak to your accountant to develop a strategy for efficient remuneration over the course of the next few years.
• New ‘National Licensing Framework’ will encourage councils to support late night venues and pubs.
• £1 in every £10 the government spends is on debt interest.
• Luxury vehicles will be removed from the Motability Scheme.
• Income tax and NIC thresholds remain the same until 2031.
• Income Tax and VAT rates remain the same until 2031.
• Bingo Duty removed from April 2026.
• Remote Gaming Duty increasing from 21% to 40% on 1 April 2026.
• Remote bets on UK horse racing will remain unchanged.
• Two child benefit cap will be removed from April 2026.

Have any questions? Please do get in touch with our team and they’ll be happy to help you.

01482 427360

help@360accountants.co.uk

The post Autumn Budget 2025: Key Takeaways appeared first on 360 Chartered Accountants.

Recent Warnings from the Charity Commission

The Charity Commission has issued a new alert to the charity sector, warning about the types of fraud risks currently affecting charities. This reminder highlights the importance of good governance, oversight, and fraud prevention training.

Common Types of Charity Fraud

There are several types of charity fraud that organisations should be aware of. Below are some key charity fraud examples and how they can occur:

Insider Fraud

Fraud committed by someone within the charity (such as a trustee, employee, or volunteer). This type of fraud can involve the misuse of funds, falsified expenses, or unauthorised transactions.

Cyber Fraud

Fraud committed online (for example, hacking into charity banking systems, sending fake emails or invoices, or impersonating suppliers or donors).

Last year, over 50% of organisations suffered an insider threat attack, and 90% of businesses felt vulnerable to cyber-attacks, showing how widespread these risks can be.

Other Charity Fraud Risks to Be Aware Of

In addition to insider and cyber threats, charities should also be alert to other forms of fraud, including:

• Donation fraud – where fake donation pages or scams divert funds.
• Due diligence and partnership fraud – when external organisations or grant partners are not properly vetted.
• Money movement risks – ensuring funds are moved safely and only with appropriate authorisation.

Being aware of these charity fraud examples can help trustees and finance teams put stronger preventative measures in place.

What You Can do to Reduce The Risk/Impact of Fraud on Your Charity

• Conduct risk assessments
• Introduce segregation of duties – ensuring no one person controls all aspects of a financial transaction.
• Regularly log in to online banking – investigate query transactions.
• Never accept change of bank account details via email alone
• Have a clear whistleblowing policy
• Minimise cash
• Perform regular reconciliations and audits
• Explore insurance
• Train your team to spot fraud
• Strengthen cyber security

Stay Informed During Charity Fraud Awareness Week

Events like Charity Fraud Awareness Week are valuable opportunities for charities to review their internal controls, assess their exposure to fraud risks, and learn from real-world examples. Regularly engaging in fraud awareness training can make a significant difference in preventing financial loss and maintaining public trust.

How 360, Chartered Accountants Can Help

At 360 Accountants, our team is trained in fraud prevention and detection. If you’d like to discuss the impact of threat of charity fraud on your organisation, please get in touch:

Call us on 01482 427360
Email help@360accountants.co.uk

Or you can view our charity services.

The post Charity Fraud Awareness Week: Real-Life Examples & Prevention Tips appeared first on 360 Chartered Accountants.

What Is the HMRC Annual Allowance?

Since 2006, HMRC has applied an Annual Allowance to pension contributions. The HMRC annual allowance is currently £60,000 per tax year.

If the combined total of an individual’s pension contributions (including employee, employer, and any private contributions) goes above this allowance, it triggers a pension charge. This charge is based on taxable income, which can significantly increase your overall tax bill.]

Understanding Your Annual Pension Statement

Your annual pension statement shows the total pension contributions made during the tax year. How these contributions are measured depends on the type of pension scheme:

• Defined contribution scheme (DC): The amount is based on what you and your employer actually paid into your pension pot.
• Defined benefit scheme (DB): Instead of showing actual payments, the value is calculated by comparing the opening and closing value of your pension over the tax year.

A quick reminder: a defined contribution scheme builds savings based on what’s paid in, while a defined benefit scheme promises a set retirement income, usually linked to your salary and length of service.

In DB schemes, a promotion or large pay rise can sharply increase the closing value of the pension. This can lead to a high Pension Input Amount (PIA). If the PIA exceeds the HMRC annual allowance, it creates a Taxable Pension Input (TIA), which will be subject to a pension charge.

Pension Charges and Higher Rate Tax

When your TIA pushes you above the allowance, HMRC applies a pension charge. For higher earners, this may mean paying tax at the 45% rate.

The effect can be particularly harsh if you’ve had a significant salary increase and at the same time exceeded your annual allowance through pension contributions.

Carry Forward Rules

There is some relief available through “carry forward”. If you didn’t use the full HMRC annual allowance in the previous three tax years, you may be able to use the unused amounts to reduce your TIA.

However, the rules can be complicated:

• Following changes in the 2015/16 tax year, there were two input periods, making carry forward calculations trickier.
• Unused annual allowances older than three years are lost entirely.

The Tapered Annual Allowance for High Earners

Further complications arise for those with adjusted income over £260,000 and threshold income exceeding £200,000. In these cases, the standard £60,000 HMRC annual allowance is reduced (tapered).

• For every £2 of income over £260,000, your allowance reduces by £1.
• Anyone earning over £360,000 will see their allowance reduced to as little as £10,000.

This means that paying into a pension above this reduced allowance could result in heavy pension charges at the 45% rate of tax.

Why You Should Seek Advice

As you can see, the rules surrounding HMRC pension allowances are complex. From understanding your annual pension statement to working out whether you are at risk of a pension charge, this is a highly specialised area.

If you have any questions or need expert guidance, please contact us, or you can explore our tax services.

The post Paying into Pension? How the HMRC Annual Allowance Could Catch You Out appeared first on 360 Chartered Accountants.

For many, business is extremely tough at the moment. What started off as a downturn for hospitality, retail, leisure and construction is now spreading to their supply chains and beyond. 

Business to consumer (B2C) organisations were already finding it difficult to pass on rising costs and energy bills to their customers who were themselves having to tighten their belts thanks to the cost of living crisis. The additional swathe of extra costs in April 2025, including increases to business rates for retail, hospitality and leisure, Employers National Insurance hikes and large increases to the National Minimum Wage, have proved a bridge too far for many small (and some large) businesses.

Youth unemployment is rising thanks to the high level of National Minimum Wage and changes to apprenticeship funding – all of which will no doubt have contributed to the high number of training providers that failed this summer. 

The government is doing little to boost consumer or business confidence. With talk of further tax rises in the November budget, so many business owners and decision makers are sitting tight and putting expansion plans on hold until the changes (and the impact of these changes) is known. 

There are several reasons for the latest downturn – the war in Ukraine, the US Trade Tariffs and Brexit to name but three. And it is of course part of the economic cycle that happens every 5 to 7 years. So, things will improve, it’s just a question of when. 

As with any economic downturn, there will be opportunities for experienced entrepreneurs or well funded businesses to take advantage of opportunities that present themselves if they can act quickly. 

If you’re finding things hard right now, here are some simple steps to take to ensure you thrive (and not just survive): 

1. Make sure your business is producing reliable, accurate and timely financial information and Key Performance Indicators (KPIs); 
2. Make sure your credit control systems and processes are watertight; 
3. Eliminate unnecessary expenditure and waste; 
4. Know the margins of all your products and services; 
5. Don’t make short term decisions you will regret in the future. Cutting training and / or marketing for example may result in short-term savings but could have grave implications in the medium-term; 
6. Don’t be afraid to increase prices and don’t join a race to the bottom; 
7. Produce cash flow forecasts, anticipate pinch points and obtain help / funding well in advance; 
8. There may be bargains around if demand for a product or service is reduced so shop around; 
9. Work with your accountant to minimise tax and see if any grants are available; 
10. Can Artificial Intelligence (AI) make any systems or processes more efficient; 
11. Don’t be afraid to make tough decisions;  
12. Bounce ideas off a trusted adviser, mentor or associate. When you’re busy fighting fires, it’s easy to miss obvious solutions; and most importantly 
13. Look after your health and wellbeing. Take regular breaks. Do things that enable you to switch off from the business. You’ll be much more productive and make better decisions if you’re healthy. 

If you’d like to bounce some ideas off me or think you could benefit from a fresh pair of eyes looking at a business challenge you’re facing, please get in touch on 01482 427360 or andy@360accountants.co.uk 

This blog was written by Andy Steele FCA FCCA – Founder 360, Chartered Accountants 

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